United Healthcare 2015 Annual Report Download - page 63

UnitedHealth Group
Notes to the Consolidated Financial Statements
1. Description of Business
UnitedHealth Group Incorporated (individually and together with its subsidiaries, “UnitedHealth Group” and
“the Company”) is a diversified health and well-being company dedicated to helping people live healthier lives
and making the health system work better for everyone.
Through its diversified family of businesses, the Company leverages core competencies in advanced, enabling
technology; health care data, information and intelligence; and clinical care management and coordination to
help meet the demands of the health system.
2. Basis of Presentation, Use of Estimates and Significant Accounting Policies
Basis of Presentation
The Company has prepared the Consolidated Financial Statements according to U.S. Generally Accepted
Accounting Principles (GAAP) and has included the accounts of UnitedHealth Group and its subsidiaries.
Use of Estimates
These Consolidated Financial Statements include certain amounts based on the Company’s best estimates and
judgments. The Company’s most significant estimates relate to estimates and judgments for medical costs
payable and revenues, valuation and impairment analysis of goodwill and other intangible assets, estimates of
other policy liabilities and other current receivables and valuations of certain investments. Certain of these
estimates require the application of complex assumptions and judgments, often because they involve matters that
are inherently uncertain and will likely change in subsequent periods. The impact of any change in estimates is
included in earnings in the period in which the estimate is adjusted.
Reclassification
During the fourth quarter of 2015, the Company changed its accounting policy for the presentation of certain
pharmacy fulfillment costs related to its OptumRx business. These costs are now included in medical costs and
cost of products sold, whereas they were previously included in operating costs. Prior periods have been
reclassified to conform to the current period presentation. The reclassification increased medical expenses by
$376 million and $369 million, decreased operating costs by $418 million and $421 million and increased cost of
products sold by $42 million and $52 million for the years ended December 31, 2014 and 2013, respectively. The
reclassification had no impact on total operating costs, earnings from operations, net earnings, earnings per share
or total equity.
Reincorporation
On July 1, 2015, UnitedHealth Group Incorporated changed its state of incorporation from Minnesota to
Delaware pursuant to a plan of conversion. The reincorporation was approved by the Company’s stockholders at
its 2015 Annual Meeting of Shareholders held on June 1, 2015. Upon reincorporation, the affairs of UnitedHealth
Group Incorporated became subject to the Delaware General Corporation Law, a new certificate of incorporation
and new bylaws, and each previously outstanding share of UnitedHealth Group Incorporated’s common stock as
a Minnesota corporation (UNH Minnesota) converted into an outstanding share of common stock of
UnitedHealth Group Incorporated as a Delaware corporation after the reincorporation (UNH Delaware). The
reincorporation was a tax-free reorganization under the U.S. Internal Revenue Code and did not affect the
Company’s business operations.
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